Lessening Market Impact from Spanish Political Strains

October 5, 2017

Spain’s stock market has rebounded 1.7% after government officials in Madrid took a hard line against negotiations with Catalan.

In contrast, investors have become even more worried about the possibility that British Prime Minister Theresa May may before yearend get the gong from hard-line Brexiters in her own Conservative Party. The dollar advanced 0.9% against sterling, which also lost ground against other European currencies.

Stocks in Europe are up 0.4% in the U.K. but down 0.2% in Germany. In the Pacific Rim, China, Hong Kong, and South Korea’s markets were closed for holiday. Japan’s Nikkei held steady. The Indonesian stock market fell 0.8%, while Singapore’s index rose 0.8%.

Comex gold is steady, and the WTI oil price has stayed above $50 but just barely with a 0.3% uptick.

The 10-year German bund and Japanese JGB yields dipped a basis point,

The U.S. goods and services trade deficit in August of $42.395 billion was its lowest since September 2016. U.S. jobless insurance claims fell 12K last week but remained upwardly distorted by the continuing impact of hurricanes Harvey and Irma.

The Canadian trade deficit widened from C$ 2.98 billion in July to C$ 3.41 billion in August due to a 1.9% volume decline in exports. Export volumes have fallen 10.6% since May.

Australia’s trade surplus in August of A$ 989 million fell between July’s A$ 880 million surplus and June’s $1.003 billion figure. Retail sales in Australia posted a second straight monthly drop, falling 0.6% in August after a 0.2% dip in July. Sales were 2.8% higher than a year earlier.

The European Central Bank published minutes from its September Governing Council meeting. Officials expressed concern over the rapid pace of euro appreciation and spent considerable time discussing different scenarios of quantitative stimulus after December, deciding to select one of those and announce such publicly after the next scheduled meeting on October 26.

The KOF Institute revised projected Swiss growth this year down to 0.8% from 1.3% expected three months ago. Inflation is seen likely to hover around 0.5% through 2019. Swiss consumer prices rose 0.2% in September and were 0.7% above their year-earlier level.

Euroland’s retail purchasing managers index rebounded to a 3-month high of 52.3 in September from 50.8 in August. The German, French and Italian retail PMI’s were all above the 50 no-change threshold, as Italy’s index jumped 2.2 points to 50.2.

The global services purchasing managers index edged back 0.1 to 54.0 last month.

India recorded 3-month highs in both its services PMI of 50.7 and composite PMI of 53.4.

The German construction purchasing managers index fell 1.5 points to an 8-month low of 53.4 in September.

In the year to August, Swedish industrial production and orders respectively advanced 7.3% and 6.3%. Irish industrial output rose 2.4% in the same 12 months.

In the year to September, consumer prices increased 1.5% in The Netherlands but slipped 0.4% in Cyprus.

South African business sentiment, which had weakened to its lowest reading in August since the mid-1980s, rebounded to a 2-month high in September.

Consumer confidence in Indonesia rose 1.6% in September.

U.S. factory orders increased 1.2% in August after little net change in the two months between May and July. Orders were 5.6% higher in June-August than a year earlier.

There’s a report that Janet Yellen remains on Trump’s short list for his choice of Fed Chair. Eradicating every initiative from the Obama Presidency has been the main consistency of this generally inconsistent president, so I would be absolutely shocked if Yellen is his Trump’s final selection.

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